Homeowners, Advocates Call for Temporary Stop to Foreclosures in California

A week after Attorney General Kamala Harris announced an $18 billion settlement for California’s foreclosure victims, homeowners and housing rights advocates declared the need to temporarily halt all foreclosure related activity.

During a foreclosure roundtable discussion held on Friday at the Mission Economic Development Agency, Alan Fisher, Executive Director of the California Reinvestment Coalition, said that advocate “groups are asking for a pause in foreclosures so people don’t lose their homes [while the settlement is being implemented.]”

John Eller, a senior organizer with Alliance of Californians for Community Empowerment (ACCE), said that by putting a temporary stop to the foreclosures “it would enable borrowers to have some breathing room while they figure out if they qualify for the settlement.”

“It will take months to implement the settlement and while they’re trying, people are still being foreclosed on. We need to put a pause [on foreclosures],” agreed Vivian Richardson, a homeowner from San Francisco’s Bay View area who is seeking principal reduction on her loan.

“Our office agrees that that would be a beneficial step,” said Shum Preston, a spokesperson for the Attorney General’s office, on a foreclosure moratorium.

Fisher explained that the banks would also benefit from a pause in the foreclosure process, “This would give them a chance to become operational on the settlement.” Fisher continued that without the pause, “the banks would be continuing to service loans and file foreclosure notices, instead of focusing on a new approach and loan modifications.”

In February 2009, then governor Arnold Schwarzenegger signed a 90-day moratorium on California home foreclosures into law. However consumer advocates criticized the law, entitled the California Foreclosure Prevention Act, for its wide loopholes and exemptions for mortgage service providers who met certain minimum criteria.

Housing advocates are not asking for a moratorium per se in this case, because they do not want to limit their call to action to the legislature alone. “We need to stop all foreclosure activity until due process for the borrowers is in place. Whether that’s local or state legislation, legal action, or voluntary action by the banks – somehow this has to happen,” said Eller.

Eller’s concern regarding violations of due process for borrowers was partly a result of the findings from an audit, conducted by mortgage investigation firm Aequitas, of 382 San Francisco homes that went through foreclosure between 2009 and 2011. Released this week by Assessor-Recorder Phil Ting, the audit found that 84% of foreclosures contained at least one clear violation of California’s foreclosure laws.

While Attorney General Harris has been widely praised for the $18 billion deal she negotiated - $12 billion more than what was discussed in the fall - homeowners who have suffered from violations such as those found in Ting’s audit said that it still fails to fully address the damage done during the foreclosure crisis.

Homeowners who were victims of robo-signing and lost their homes to foreclosure from 2008-2011 will receive $2,000 as a part of the multi-state settlement.

“Somebody told us they would offer us $2,000 – that’s just a slap in my face,” said Rolando Peña, a San Francisco resident who was evicted from his home six months ago. “Now we are renting a house, paying $2,350 a month in rent. How are we going to recover our money?” he questioned.

Norma Garcia, senior attorney at Consumers Union, echoed Pena’s concerns, “There’s no doubt that when you compare $2,000 to the loss of a home, we’re not talking about anything that’s even comparable.”

Richardson expressed her concerns, “It’s good for the 25,000 homeowners who will get the help, but mine is going to be a continued fight outside of all of this.”

Richardson’s lender is Deutsche Bank, which is not one of the five (Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo) that are part of the settlement.

Some homeowners viewed the settlement as being so inadequate that they would have been better off without it.

Reverend Archbishop Franzo King, a Bayview resident and founder of the St. John Coltrane African Orthodox Church, whose house is set for auction on March 5th expressed confusion about why there was excitement about the settlement. “I was excited when Harris wasn’t getting involved. It should be without compromise. I am feeling that we’ve been betrayed.”

“If you put a knife in my back that’s 10 inches long and you pull it out 7 inches,” he noted, “I still got a knife in my back.”